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Landowners With a Carbon Lease: Restrictions or Implications

Updated: Dec 6, 2023

aerial photograph of a forest with golden and green trees

A carbon lease is an agreement between a landowner and a company, where the landowner is paid to store carbon on their property through practices like reforestation, soil conservation, reduced tillage, or using a previously drilled oil well. The purpose of a carbon lease is to reduce carbon emissions and combat climate change.

Carbon Leasing

Landowners can participate in a carbon lease through carbon sequestration that is stored in the soil or through trees on the property. This is known as carbon offsets or carbon sequestration. Landowners can also lease their previously drilled wells to store carbon underground. This is largely known as Carbon Capture and Storage (CCS). Once a carbon lease is set, the landowner will have to stick to whatever restrictions or limitations are in place according to the carbon developer. The lease may be for a fixed term, such as 10 or 20 years. During this time, the landowner may not be able to use the property for other purposes or terminate the lease early without penalty. The landowner may need to allow the company to monitor the property to ensure that carbon is being stored according to the terms of the lease. This may require the landowner to grant access to the property for regular inspections and measurements. However, many carbon developers never step foot on the property, and instead rely on satellite imagery. The carbon lease agreement may specify that the company has the right to sell or trade carbon credits generated by the carbon storage activities on the property. The landowner may not have the right to sell or trade these carbon credits without the company's permission. Other restrictions for carbon leasing may be found below. If you’re interested in learning more about how much money you could make off of your property through carbon credits, just find and identify your parcel on our map to get your free estimates! Whether you choose to try to get carbon credits from your property is up to you, but understanding this information is essential.

Land Use Restrictions for Landowners

The landowner may have to restrict their land use to activities that promote carbon storage, such as planting trees or using no-till farming practices. These restrictions may limit the landowner's ability to use the property for other purposes.

  • Limits on land use: The landowner may have to limit their use of the land to activities that promote carbon storage, such as reforestation, afforestation, or conservation tillage. For example, if the land is currently being used for agriculture, the landowner may have to reduce tillage or adopt cover crops to promote carbon sequestration in the soil.

  • Restrictions on harvesting timber: If the landowner agrees to plant trees as part of the carbon storage practices, they may have to agree to not harvest the trees for a certain period of time, such as 10 or 20 years. This is to ensure that the carbon stored in the trees remains sequestered.

  • Limits on development: The landowner may have to agree to limit or prohibit any development on the land during the lease term. This could include restrictions on building new structures or infrastructure, mining, or any other activities that may disturb the soil or vegetation.

  • Conservation easements: In some cases, the landowner may have to grant a conservation easement, which is a legal agreement that permanently restricts certain uses of the land to protect its conservation values. This could include prohibiting development, restricting agricultural activities, or preserving natural habitats. Although landowners can participate in both conservation easements and carbon credit programs simultaneously, it is uncommon.

  • Access for monitoring: The landowner may have to allow the carbon lease company or a third-party monitoring organization access to the property to monitor and verify the carbon storage practices being implemented. This may include allowing periodic site visits, installing monitoring equipment, or providing regular reports on activities.

It's important for landowners to carefully review and understand the land use restrictions and other obligations that come with a carbon lease before agreeing to participate. Landowners should consider their long-term goals for their property and work with legal and financial advisors to ensure that the lease is aligned with their interests and objectives.


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